Iceland's government moves closer to joining EU

REYKJAVIK, Iceland 
Iceland's new government said Sunday it will ask parliament to vote on whether the recession-hit country should start membership talks with the European Union.

Prime Minister Johanna Sigurdardottir said a bill authorizing accession talks would be introduced when Iceland's parliament, the Althingi, resumes sitting on Friday.

"In the coming weeks the demand of the people of Iceland will be to find out what the EU has to offer to us," Sigurdardottir said. "It would not be fair for the Althingi to prevent that."

Sigurdardottir and Finance Minister Steingrimur J. Sigfusson also introduced their new Cabinet, two weeks after their two party coalition won elections.

Talks on forming a government had snagged on whether Iceland should seek to join the 27-nation EU, and potentially the euro – seen by many Icelanders as the country's best route out of financial crisis.

Sigfusson acknowledged that asking the parliament to make the decision on EU membership talks, rather than putting it to a national referendum, would be difficult for many Left Greens to accept, and said the party's lawmakers should vote according to their consciences.

Sigfusson insisted, however, that the Left Green Movement is still against joining the EU and "has in no way deviated in its policy on the matter."

A final decision on EU membership would be put to Icelanders in a referendum, the government said.

Iceland, a volcanic island of 320,000 people, has been devastated by the global financial crisis after years of having one of the world's highest standards of living. The country's banking system collapsed late last year under the weight of huge debts amassed during years of light economic regulation.

The country's currency, the krona, has plummeted, while unemployment and inflation have spiraled. Iceland has sought a $10 billion International Monetary Fund-led bailout.

The two leaders promised to work closely with the IMF on rebuilding Iceland's economy, and said their first 100 days in office would include measures to restructure the banking system, placate foreign creditors, introduce political reform and create jobs.

The government announced Sunday divides Cabinet posts between the two coalition parties, and also includes two unaligned outside experts.